By Lauren Wray
This Wednesday founder and chief executive officer of Chipotle, Steve Ells stepped down from company. Chipotle was founded in 1993 and Ells has been operating the company from the start. The reasoning behind the change started with the safety issues that occurred in the fall of 2015. Several customers around the United States reported that they became sick after eating Chipotle. After an investigation customers were sick with E. coli. This resulted in a slew of lawsuits tanking the company in sales and decreases its stock by 5%. The company was able to act quickly and close over 43 locations preventing further outbreaks from happening. Although, this was a smart move for Chipotle some customers were scared away. Many people were no longer interested in buying from chipotle and copious amounts of investors dropped. After this catastrophe Chipotles stock decreased $100. But, over the next two years the company worked hard to improve and grow.
Then disaster struck again when a norovirus outbreak occurred in a Virginia location. The disease was caused by a sick employee that came into work that day. The sick employee was not sent home due to a lack of sick policy from upper management. Just a week later a video of rodents falling from the ceiling of a Chipotle in Dallas, Texas surfaced. These are the only two restaurants that have reported incidents like these. Both locations addressed the problems and investigations were held. At this point, Chipotle took another hit in stock decreasing 12% during that month. Policies became stricter in hopes to decrease the risk of another incident happening. Most customers still remain loyal to the company, but sales still are continuing to decrease and their stock is at an all-time low. This caused bigger problems for the long term of the company.
Ells will however, not leave the company entirely he is just becoming a smaller role of executive chairman. He has been discouraged after failing to increase the reputation of Chipotle for the past two years. Chipotle is currently making an improvement plan in order to get back to where they were before the safety issues. This plan includes creating a stricter food safety procedure, adding new foods to their menu, and spending a great deal of money marketing their brand. Chipotle has also given away millions of dollars in free burrito’s in hopes to increase sales but has proven unsuccessful and has cost them more money. Having just initiated the improvement plan the company’s management has not seen the increase in sales that they were hoping for. The stock still remains down at $294 a share. Although, since Ells leaving was announced shares increased 5%. This pleased the investors, but also puts pressure on finding a new CEO that will steer the company in the right direction. In conclusion, since there were so many issues that Ells could not fix in the past two years he believes this is the best decision for the company in the long term.